‘SETTLEMENT REACHED’ FOR ABRAAJ FOUNDER OVER BOUNCED CHEQUE
Lawyer for Arif Naqvi says parties have reached an understanding over the main issues to repay the loan
The immediate possibility of an arrest for the Abraaj Group founder Arif Naqvi could soon be out of the way as his lawyers are preparing to finalise a mutually agreed settlement with the claimant in a bounced cheque case.
Mr Naqvi, the chief executive of the embattled buyout firm, which is facing allegations of misuse of investors’ funds, has reached an out-of-court settlement with a creditor in a criminal case over the cheque in question and is waiting to sign off on the deal, his lawyer said.
“The parties reached an understanding late on Wednesday night over the main issues to repay the loan. A document is underway of drafting,” Habib Al Mulla, executive chairman of Habib Al Mulla Baker Mackenzie, told The National on Friday. He did not say when the agreement would be signed.
A judge in Sharjah was scheduled to rule on Thursday whether the cheque was issued without the necessary funds but adjourned the hearing until Wednesday.
An adviser to Hamid Jafar, the claimant in the bounced cheque case, said in an email to The National: “The court adjournment on Thursday has given Mr Naqvi additional time to arrive at a viable settlement.”
On Monday, the prosecution had asked the court for Mr Naqvi to receive the maximum three-year sentence. The punishment for issuing a bounced cheque under UAE law can be jail or a fine.
The case relates to a cheque for Dh177.1 million ($48m) signed by Mr Naqvi, who is in the UK but a Dubai resident, and Abraaj executive Rafique Lakhani, and made out to Mr Jafar, another founding shareholder in Abraaj.
The cheque was used as partial security for about $300m of loans made to Abraaj by Mr Jafar, who claims Mr Naqvi had no intention of repaying, his lawyer Essam Al Tamimi said last week.
Mr Al Mulla last week denied there was no intent to repay the loan, during a telephone call with The National. “There was a loan given by the Jafars to Abraaj Group and to Arif – $200m to Abraaj and $100m to Arif – against which they took cheques as security,” he said. “Both parties knew there were no funds for these cheques, otherwise why should he take $300m if he [already] has $300m?”
There have been ongoing discussions and several drafts of a proposed settlement between the two parties, and Mr Naqvi has paid $33m of the total $100m to Mr Jafar, Mr Al Mulla said last week.
The out-of-court settlement being drawn up resolves the dispute over the entire $300m loan, not just the cheque which is the subject of the Sharjah court case, Mr Al Mulla said.
The case is the latest twist in a five-month saga involving Abraaj Group, based in Dubai, which has been accused of mismanaging investors’ money in a $1 billion healthcare fund. Abraaj has denied the allegations.
The company is undergoing a court-supervised restructuring in the Cayman Islands and last month reached a provisional agreement to sell part of its funds management business to Colony Capital of the US.
Dubai’s financial services regulator the Dubai Financial Services Authority is also investigating allegations of fund mismanagement at the firm, and has interviewed Mr Naqvi and other senior executives as part of the investigation, Reuters reported on Wednesday, citing unidentified sources.